Consumer surplus is
A) the total difference between the total amount that consumers actually pay for an item and the total amount that they would have been willing to pay.
B) the total difference between the total costs firms incur in producing an item and the utility consumers derive from purchasing the item.
C) the total difference between the total amount that consumers would have been willing to pay for an item and the total amount that they actually pay.
D) the total difference between the utility consumers derive from purchasing an item and the total costs firms incur in producing the item.

Question

Quizplus · Accepted Answer

Consumer surplus is the difference between what consumers are willing to pay for a good or service and what they actually pay. Therefore, option C correctly defines consumer surplus as the total difference between the total amount that consumers would have been willing to pay for an item and the total amount that they actually pay. Option A is incorrect because it implies that consumers pay more than what they are willing to pay, which is not the case. Option B is incorrect because it refers to the total cost of production, which is not relevant to consumer surplus. Option D is incorrect because it focuses on the costs of production rather than the willingness of consumers to pay.

Consumer Surplus Is